Attorney Typical Tish James and HFZ Cash Group’s Ziel Feldman (Getty)

New York state’s Lawyer Standard has acquired a complaint accusing HFZ Capital Group’s Ziel Feldman of illegally presenting residences for sale — a violation that, if confirmed, could get him a lifetime ban on providing condos and co-ops in New York.

The grievance alleges that Feldman supplied the models to investors in projects before submitting his supplying program with the AG’s place of work, a resource acquainted with the subject informed The Serious Deal. That would be a violation of the state’s wide-reaching anti-fraud Martin Act masking the sale of securities or, in the circumstance of authentic estate, condos and co-ops.

The grievance names Feldman and his former associate Nir Mier, together with HFZ loan companies JPMorgan Chase and CIM Group, in accordance to the resource. A spokesperson for Attorney Typical Tish James verified the business office received the complaint, but declined to comment further more.

Associates for Feldman and Meir did not immediately respond to requests for remark.

The allegations towards HFZ and its lenders claim Feldman and Nir supplied traders models in their advancement initiatives in exchange for funds contributions before HFZ experienced submitted its offering programs to the AG’s office environment. Builders are necessary to post the disclosures to point out officials in advance of supplying models as a way to safeguard likely prospective buyers.

The criticism also names lenders JPMorgan Chase and CIM Group, proclaiming they have been aware of the violations and turned a blind eye.

A representative for CIM Group claimed the organization could not react considering that it had not acquired a duplicate of the complaint, and a spokesperson for Chase declined to comment.

The supply advised TRD that the grievance includes extra allegations, and that James’ office had now been investigating HFZ prior to this grievance.

HFZ is a single of New York’s most prolific rental developers, with assignments like the $2 billion XI growth on the Higher Line in West Chelsea and the conversion of many pre-war apartment structures into condos, including the famed Belnord flats on the Higher West Side.

But above the earlier yr or so, HFZ’s business enterprise has crumbled. The developer has shed various jobs to its loan companies and is battling to keep onto the XI advancement.

Together the way, HFZ has been dogged by scandal. For yrs, Feldman continuously denied allegations that he was backed by controversial diamond magnate Beny Steinmetz. But TRD not too long ago uncovered documents that clearly show Steinmetz’s financial commitment in HFZ’s Belnord job.

But the company’s critics say accountability also lies with HFZ’s lenders, which they say ended up mindful of the developer’s wrongdoings and facilitated them by ignoring the dilemma.

One particular trader, New York-based Arel Money, lately submitted a lawsuit alleging that JPMorgan, a loan company on HFZ’s XI improvement, pressured the developer to divert revenue from its conversion assignments to the struggling West Chelsea task.

The Martin Act, meanwhile, offers the New York Lawyer Basic wide powers to look into fraud. Former AG Eliot Spitzer applied it frequently to look into Wall Street, as did his successor Eric Schneiderman.

In 2015, Schneiderman utilised the Martin Act to get to an agreement with architect-turned developer Peter Moore, who had been accused of providing syndications in a Tribeca rental development at 39 Lispenard Road some time in 2011 just before submitting his correct paperwork with the AG’s business.

As component of the settlement, Moore agreed to pay a $50,000 good and was banned from promoting condos for a period of time of 6 months.